The Spider Web of Money In Pro Golf
Pro golf has consolidated. Will it continue?
Every Monday, I write a newsletter breaking down the business in golf. Welcome to the new Perfect Putt members who have joined us since our last newsletter. Join 10,000+ intelligent and curious golfers by subscribing below.
Read Time: 6 minutes.
Hey Golfers —
Pro golf is undergoing a consolidation of sorts.
Look, I am relatively tired of reading about the PGA Tour and LIV business deal — it’s a tired subject in golf. Most of you are tired of reading about it, too. I haven’t written about it because there is seemingly no new news — it is mostly conjecture.
We aren’t in the prediction business. Why would we know the outcome when most players on the PGA Tour, DP World Tour, or LIV have no idea what will happen?
Matt Fitzpatrick said this last week.
Me saying things to the PGA Tour board, me saying things to the DP World Tour board, it's not going to change, so why am I going to waste my time talking about it.
A handful of weeks ago, the NFL voted to allow private equity investors to buy stakes in teams.
The pro sports investment landscape is rapidly changing. And it got me thinking about golf. The recreational aspect of golf has never been better. And you could argue that pro golf has never been better from a golfer standpoint — the purse money is at record highs.
But ratings are declining; fans are becoming disinterested.
Over the past few years, we have seen professional golf on the men’s and women’s sides consolidate and realign.
Before LIV played an event, they invested $300 million in the Asian Tour over a ten-year period to increase purse sizes.
The Asian Tour also operates the Asian Development Tour. The top ten on the order of merit receive an Asian Tour card. Just for reference, here is how much the order of merit winners won in the last three seasons.
2023 — $54,705
2020 - 2022 — $86,449
2019 — $50,942
LIV then launched its own tour a few months after the investment in the Asian Tour. Competing directly with the PGA Tour and DP World Tour.
By the summer of 2022 — LIV controlled a small portion of the men’s professional game through investments — three tours in total.
Then, in the fall of 2022 — LIV announced a strategic alliance with the very small MENA Tour.
Before any of the above took place, Aramco, the Saudi Arabian state-owned oil organization, invested $10 million in prize money for the Ladies European Tour in 2021. The Ladies European Tour has a season-long purse of around $40 million. Meaning Aramco was responsible for 25% of the LET Tour prize money.
The Public Investment Fund — the sovereign wealth fund of Saudi Arabia — is a majority investor in LIV.
So we ended up with five professional golf tours in which Saudi Arabian organizations had influence in by late 2022.
An interesting aside is that the LPGA Tour and LET Tour voted on a proposed merger in the fall of 2023. The vote fell through, and a merger did not take place. A LET Tour sent me a message when this was going on. She said this.
The LET Tour notified us that Aramco had blocked the vote to merge.
Reading between the lines, I believe Aramco did this to wait and see how the PGA Tour and LIV merger worked out before embarking on the women’s side.
As it stands right now — Saudi Arabian organizations have influence or investment in five tours.
LIV
Asian Tour
Asian Development Tour
MENA Tour
LET Tour
While LIV was making its investments, the PGA Tour also made its own.
In early 2021, the PGA Tour invested $85 million in 15% of European Tour Productions, the media arm of the DP World Tour. The deal was structured as $30 million upfront and four annual payments of $13.75 million.
Around eighteen months later, the PGA Tour increased its investment in European Tour productions to a 40% equity stake.
The PGA Tour stated in a press release that the investment would increase purse sizes on the DP World Tour.
The DP World Tour is affiliated with the Challenge and Legends Tours, its development, and senior tours.
The PGA Tour is responsible for the following.
Korn Ferry Tour
PGA Americas Tour
PGA Tour Champions
After the PGA Tours’ investment in the DP World Tour’s media arm, it had influence or investment in the following tours.
PGA Tour
DP World Tour
Korn Ferry Tour
Challenge Tour
PGA Tour Champions
Legends Tour
But that isn’t all. The PGA Tour and DP World Tour announced a partnership with the Japanese Tour. The top three on the Japanese order of merit will receive a DP World Tour card.
What we have right now is two groups that have a significant influence on professional golf — the PGA Tour and LIV.
And if the proposed merger between the PGA Tour and LIV comes to fruition. The PGA Tour will have an influence over most every high-level pro tour in the world. And LIV will have investment in most every high-level pro tour in the world.
I am not saying this is good or bad — you can make your own opinion with the information. There is no denying that the pro-golf landscape has changed drastically.
But what is happening in golf is unlike anything we have seen in professional sports. And I would wager that golf won’t be the last sport to see the investment landscape change.
Have a great Tuesday. We will talk to you next week!
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Breaking down the finances of running an event on the Korn Ferry tour would be interesting, especially since that tour isn't televised on GC at the level it used to 20 years ago. Million dollar purses & the overall cost of running an event for a smaller crowd with no national/international TV can't be cheap, less cache for pro am pairings as compared to pga tour. I'm a decent googler and haven't found any info on this for the KFT or tours on that type of level (e.g. legends, challenge, etc)
Been an avid reader for quite some time now. Always a great, easily digestible read to start the week.
I see Hanna golf is starting to make putters on LinkedIn. Is Hanna on Kickstarter? all self-funded? Seeking funding?